Big Data

How streaming benefits consumers: quantity, variety and discovery

PRESS RELEASE 11/04/2017 - Streaming services like Spotify, where consumers get access to large music libraries on subscriptions, have gained popularity in a relatively short period of time. They have done so at the expense of services like iTunes, where consumers become the owners of music they have bought. What are the consequences for consumers? How does listening change when consumers subscribe to a streaming service?

Tilburg researchers Hannes Datta, George Knox and Bart Bronnenberg wanted to find out and published their results in the article Changing Their Tune: How Consumers' Adoption of Online Streaming Affects Music Consumption and Discovery, to appear shortly in Marketing Science.

The researchers collected a vast amount of data on individual consumers’ listening behavior across many digital music platforms, allowing them to observe what consumers were listening to before and after adopting a streaming service.

More variety at a low price

Six months after joining a streaming service, consumers listen to nearly 50% more music, and spread their listening out across a wider set of artists. That suggests there is a lot of music that is valued positively by consumers, but not enough to cover the cost of buying and owning it. This is one of the benefits streaming delivers to consumers.

Music is an experience good: it’s hard to know whether you like something before you listen to it. In ownership platforms, like iTunes, consumers are less likely to experiment with new music because they have to buy it. With streaming platforms, the price of listening to additional music is zero. So consumers discover more new music; they also tend to favor less popular artists over superstars.

This sounds like good news for smaller labels and less popular artists. However, the study also finds that consumers are less loyal to the music they discover on streaming. So, while it’s easier to make it to a consumer’s listening set, it’s harder to stay there.

The average new song discovered on streaming is heard less often, but the best new songs discovered on streaming are listened to more than the best new songs discovered on ownership platforms. Hence a second benefit streaming delivers to consumers is reducing the cost of discovering new music that matches their tastes.

Dr. Hannes Datta, Dr. George Knox and Professor Bart Bronnenberg are affiliated to the Marketing department of the Tilburg School of Economics and Management of Tilburg University.

Note to the editors

Hannes Datta, George Knox and Bart
Bronnenberg: Changing Their Tune: How
Consumers' Adoption of Online Streaming Affects Music Consumption and Discovery,
in: Marketing Science (2017, to be
published)